Electronic commerce businesses and electronic payment transaction systems have become increasingly popular, and significant investment and effort are employed to continue development of improved systems for facilitating such transactions. The most common systems are use of credit cards, or Pay Pal or similar “wallet” services tied to a user's bank account. Wallet services allow users to make electronic commerce transactions and can also be used to authenticate the holder's credentials. One drawback of these and other current systems is the loss of privacy they demand, since verification and authentication is most commonly achieved by identifying personal identity of the user or otherwise proving the user's knowledge of and control over his account before the transaction is allowed to proceed. Authentication is particularly a problem if the parties do not know each other and/or are not dealing with each other face to face. In such cases, various forms of identification, such as passwords, may be required as a condition of completion of the transaction.
Current systems further require audit accountability in much the way bank checking accounts do. Cash systems do not require such audit accountability. The audit accountability gives rise to another privacy drawback of these systems in their central organization, which tracks all ends of the transaction and stores them in a centralized system subject to audit. Again, this is similar to the way in which a bank organizes and stores checking account information, but very different from the way cash is tracked.
Another drawback of these electronic payment systems is that user account and identity information must be given over to the centralized party or parties organizing the transaction. The replication of a user's data and central storage of it creates a target for identity thieves. Many systems delete user information at the end of each transaction/session, so each new transaction must demand key account and identification information, which can be cumbersome to enter. Additionally, many of these systems require special hardware devices to execute payment when used in a physical store. For example, PINs must be entered in authentication devices connected to the buyer's and/or seller's financial network, and authentication-when-not-present apparatuses must be connected from sellers to credit-card issuing institutions over the network to authorize other transactions. Data unique to the buyer's account is then transmitted and often stored prior to obtaining authorizations for the transactions.
Software-based on line payment systems such as Bitcoin, often use values not tied directly to legal currency but rather to its own unit of account. These software-based on line payment systems are often in conflict with the existing banking system. Payments are made peer-to-peer without a central repository or single administrator, resulting in a decentralized virtual currency. These systems often provide an insecure value that floats with the market.
An electronic commerce platform should be convenient, secure, and transparent. Different approaches have been used in the past to provide different levels of convenience, security, and transparency.